Native Art Museum, a not-for-profit entity that elects not to capitalize its collection items, purchased for $10,000 a wonderful totem pole for display near the door of the museum. As a result of this transaction, which of the following entries should be made?

Question

Quizplus · Accepted Answer

Since the Native Art Museum elects not to capitalize its collection items, the purchase of the totem pole for display should be recorded as an expense rather than capitalizing it as an asset. Therefore, the correct entry is to debit Collection expense and credit Cash.

Native Art Museum, a Not-For-Profit Entity That Elects Not to Capitalize